I am the editor of Forbes Magazine, and believe strongly that entrepreneurial capitalism and market-based thinking can solve the world's problems. This is my second stint at Forbes -- between 1991 and 1997, I was a reporter, a staff writer (five cover stories), associate editor and Washington bureau chief. In between, I caught the start-up bug: I co-founded P.O.V. Magazine (Adweek's Startup of the Year), and then launched Doubledown Media (Trader Monthly, Dealmaker, Private Air, etc.). As a fattening hobby, I have reviewed restaurants for various magazines since college (and was a National Magazine Award finalist for my wine writing). I used to think chronicling the world's greatest business minds made me a great entrepreneur, but I now realize my time as an entrepreneur made me an acute business journalist. For the full story, check out my book, just out in paperback, The Zeroes: My Misadventures In the Decade Wall Street Went Insane.

Jeremy Lin May Be The Dumbest Harvard Grad Ever

Sorry for the harsh headline, but I’m having a hard time coming up with any other conclusion. While I haven’t checked the Harvard core curriculum lately, it must surely be light on math, psychology and logic, and completely devoid of Marketing 101. How else to explain the self-destructive actions of its most famous basketball alum, Jeremy Lin, who has taken the global phenomenon known as Linsanity and doused it with kerosene.

(Image credit: Getty Images via @daylife)

After last night’s decision by the New York Knicks to let him walk to the Houston Rockets, almost all of the analysis has focused on Knicks owner Jim Dolan. He faced a vexing dilemma, given the back-loaded contract offer from the Houston Rockets that would have forced the Knicks to effectively pay $50 million for Lin’s services three years hence. (My friend Howard Beck of the New York Times provides a useful primer here.) How do you weigh Lin’s basketball and marketing potential against a very small sample set (he’s started all of 25 games in his career) and also against not just what he would be paid, but the larger ramifications of his contract down the line? Given that the adjectives associated with Dolan, backed up a dysfunctional track record, generally include illogical, vindictive, paranoid and dumb (and because I’m a lifelong Knicks fan, I’m being kind), he’s predictably being ripped apart.

In the end, though, I’m more fascinated by the choices Lin made. Dolan will be rich and reviled no matter what he does. Lin may have signed a big contract, but he also just provided the folks at Harvard Business School with a brilliant case study how to cost yourself millions of dollars and scads of influence when you’re not looking at the big picture.

To review, the point guard’s scrub-to-star rise in February – Linsanity! — has arguably been the best sports story of the year, played out on one of the biggest stages, Madison Square Garden. But the NBA’s complicated labor rules forced Lin to shop around his services in order to maximize his next contract with the Knicks. At first, he did so brilliantly, according to numerous reports, originally getting Houston to offer him roughly $5 million for his first two years of his contract (the maximum anyone was allowed), and then a $9 million balloon in the third year, with a team option for a fourth.

Various Knicks sources, including their coach, playing poker as deftly as a late-night drunk at Circus Circus, announced that they would match it, and that was presumably that. A global marketing machine would remain in the global marketing capital, as had been his goal all along, Lin just told Sports Illustrated.

And this where Lin flunked miserably. After the clumsy Knicks showed their hand, Lin and Houston agreed to add another $5 million to his guaranteed salary in third year – a true poison pill, since that extra $5 million would cost the Knicks an extra $20 million or so, courtesy of the NBA’s punitive new luxury tax, atop the effective $30 million bite they had already internalized.

I get why Houston did it. But why did Lin, as an equal party to the new offer, go along? I can only offer two theories:

Financial Certainty: With the revised offer, Lin guaranteed himself an extra $5 million in his pocket, three years from now. That’s serious scratch for a man who had been sleeping on his brother’s couch earlier this year. And given legitimate worries that he was way overperforming during his magical 25 game coming out, taking the sure thing now makes some sense.

But why structure it in a way so punitive to New York? If it was all about certainty, Lin could have instead tried to guarantee that fourth year (or even a fifth year). At $9 million per, that’s way more downside protection, yet spreading it out in a way that didn’t push the Knicks toward the fiscal cliff.

As for the upside, forcing the Knicks to even consider ending his tenure in New York is the truest definition of Linsanity. If Lin is even 80% as good as he showed in flashes last season, fronting a very good, very hyped Knicks team had the potential to bring him tens of millions in endorsements. But as Steve Herz, who cuts celebrity endorsement deals as president of IF Management previously told my colleague Tom Van Riper: “Lin leading the Charlotte Bobcats back to respectability wouldn’t be that interesting. It’s not something that Coca-Cola is going to play $10 million for.”

Insert “Houston Rockets” into that sentence, and you get Lin’s new reality. Rather than the golden boy on an obsessed-over team in the world’s media capital, he’s now an above-average player on a below-average team in a low-profile city.

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You’re an idiot. The NYKs told Jeremy Lin that they would match any offer. Knicks’ management told Lin that they definitely had a future for Lin in New York. The NYKs could’ve offered Jeremy Lin $25 for 4 years from the get-go and he would’ve taken that deal. If the New York Knicks really wanted him, they should’ve offered him that contract. Instead, they told him to test the market and he did. He did that very well. From the way I see it, it was better for Jeremy Lin to leave that caustic NYKs locker room. You obviously don’t know the whole story and you don’t know what you’re talking about.

Well Mr. Lane. From your article, Lin had two choices, one is to sign Houston’s contract and guarantee his millions. Or take the risk and walk away, like you said being in NY might potentially make him a lot more money than that $5 million extra he will receive from Houston.

One choice is conservative with less return and other choice is more risky but can be with greater return in the future. Neither move can be considered “dumb”, you can call his “conservative”.

But of course you would call him dumb because you are making your headline more attention-grabbing and potentially receive higher ratings and popularity. Analogous to Lin’s career, you are making the opposite choice as him as an editor.

This is a pure headline grab, which worked, because I saw this on ESPN which lead me here. JA Adande pointed out that according to Forbes, none of the world’s 25 highest-paid athlete endorsers (according to Forbes) plays in New York. Jeremy Lin is an international superstar. Peyton Manning does okay in Indianapolis. Lin has already had the opportunity to make millions in endorsements. He’ll do fine.

They gave him a 2 year, $11M offer during the season. He overvalued himself. His agents obviously didn’t read the CBA nor have most of the YOKELS commenting and pointing fingers at the Knicks here. Lin is an outright LIAR.

Of course he had to accept the offer. What was he gonna do? Tell Houston they cant put a poison pill in there like that otherwise NY will be mad at me. hahahaha come on.

Its everywhere that NY told him to come back with an offer sheet, but he cant get an offer sheet unless he commits to that future franchise. Come back to the real world therefore Houston is not giving an offer sheet to Lin unless he is committed to sign it.

Yet Lin is the smart one, smart all the way to the bank. Lin wanted to stay with the Knicks, but he didn’t owe them anything.

The Knicks didn’t even make an offer to Lin when free agency began, and let other teams set the market price for him. What was Lin supposed to do? Sit and wait and hope the Knicks would come begging for him?

With all due respect, I also disagree. Nothing in the CBA prevents a team from making an offer to a player. The Knicks had every opportunity to do right by Lin and offer him something in the order of the max for year 1 and year 2 which was just over $5M. Dolan in a failed effort to skimp on Lin opted to take a gamble to see what the market would offer Lin – but clearly this could’ve been avoided if they’d made a decent offer in the first place. Your statement of “(ignoring the fact that the way the system was set up, they needed to let someone else make an offer if he wanted more money)” exactly what “system” are you referring to that prevents the Knicks from making an offer to their own player? They did not “NEED” to wait to make an offer. In time, we can hypothesize which decision may have been most profitable financially, but there’s something to be said of being somewhere that you’re wanted, appreciated and where someone has taken the initiative to secure your services.